Econ exam 3

Increases in the productivity of labor result partly from: the law of diminishing returns. improvements in technology. reductions in wage rates. increases in the quantity of labor.

improvements in technology

Marginal revenue product (MRP) of labor refers to the: increase in total revenue resulting from the sale of an additional unit of output. amount by which a firm's total resource cost increases when it employs one more unit of labor. increase in total revenue resulting from the hire of one more unit of labor. price at which additional units of labor can be employed in a monopsonized labor market.

increase in total revenue resulting from the hire of one more unit of labor.

Refer to the above graphs. Stanville has a comparative advantage in producing: product A. product B. both product A and B. neither product A nor B.

product B

The terms of trade reflect the: rate at which gold exchanges internationally for any domestic currency. ratio at which nations will exchange two goods. fact that the gains from trade will be equally divided. cost conditions embodied in a single country's production possibilities curve.

ratio at which nations will exchange two goods.

If a firm is hiring a certain type of labor under purely competitive conditions: its labor demand curve will be perfectly elastic at the market-determined wage rate. the labor supply curve will lie above the marginal labor cost curve. the labor supply and marginal labor (resource) cost curves will coincide and be upsloping. the labor supply and marginal labor (resource) cost curves will coincide and be perfectly elastic.

the labor supply and marginal labor (resource) cost curves will coincide and be perfectly elastic.

The above data indicate that production in: both Latalia and Trombonia is subject to constant opportunity costs. Trombonia is subject to decreasing costs, but production in Latalia occurs under increasing opportunity costs. Latalia is subject to increasing costs, but production in Trombonia occurs under constant opportunity costs. both Latalia and Trombonia are subject to the law of increasing opportunity costs.

both Latalia and Trombonia is subject to constant opportunity costs.

Refer to the above data. The marginal revenue product of the second worker is: $16. $32. $8. $4.

$16

Refer to the above data. If the market wage rate is $8 and the firm hires its profit-maximizing number of workers, the firm's total revenue will exceed its total wage payment by: $20. $16. $12. $8.

$20

If two nations have straight-line production possibilities curves: then their trading possibilities curves must lie inside the production possibilities curves. there will be no basis for mutually advantageous trade. there will be a basis for mutually advantageous trade whether the slopes are equal or not. there will be a basis for mutually advantageous trade provided the slopes differ.

there will be a basis for mutually advantageous trade provided the slopes differ.

Refer to the above data. The firm is hiring labor: at a wage rate that exceeds labor's MRP. under purely competitive conditions. in an imperfectly competitive market. as a monopsonist.

under purely competitive conditions.

Refer to the above data. At the profit maximizing level of employment, this firm's total labor cost will be: $16. $30. $24. $32.

$24

Refer to the above data. At the profit maximizing level of employment, this firm's total revenue will be: $16. $32. $24. $30.

$30

Refer to the above data. If the market wage rate is $8 and the firm hires its profit-maximizing number of workers, the firm's total wage bill (payment) will be: $16. $24. $32. $48

$32

Refer to the above data. This firm's product price is: $2. $3. $4. $16.

$4

Refer to the above data. The marginal revenue product of the fourth worker is: $8. $52. $2. $4.

$8

Refer to the above data. In maximizing its profit, this firm will employ: 2 units of labor. 3 units of labor. 4 units of labor. 5 units of labor.

3 units of labor.

Refer to the above list. The outcome in a purely competitive labor market is shown by: 1. 2. 3. 4

3.

Refer to the above data. If the market wage rate is $8, this firm will employ: 2 workers. 3 workers. 4 workers. 5 workers.

4 workers

Refer to the above data. The firm will maximize profits (or minimize losses) by employing: 5 workers. 4 workers. 3 workers. 2 workers.

5 workers

On the basis of the above information: Gamma should export both tea and pots to Sigma. Sigma should export tea to Gamma and Gamma should export pots to Sigma. Gamma should export tea to Sigma and Sigma should export pots to Gamma. Gamma should export tea to Sigma, but it will not be profitable for the two nations to exchange pots.

Gamma should export tea to Sigma and Sigma should export pots to Gamma.

The production possibilities curves above suggest that: West Mudville should specialize in, and export, baseball bats. West Mudville should specialize in, and export, both baseballs and baseball bats. East Mudville should specialize in, and export, baseball bats. workers will try to immigrate from West Mudville to East Mudville.

West Mudville should specialize in, and export, baseball bats.

Differences in production efficiencies among nations in producing a particular good result from: different endowments of fertile soil. different amounts of skilled labor. different levels of technological knowledge. all of these.

all of these

Marginal resource cost refers to the: increase in total revenue resulting from the sale of the extra output of one more worker. price at which additional units of a resource can be hired in an imperfectly competitive resource market. increase in total cost resulting from the production of one more unit of output. amount by which a firm's total resource cost increases as the result of hiring one more unit of the resource.

amount by which a firm's total resource cost increases as the result of hiring one more unit of the resource.

Countries engaged in international trade specialize in production based on: relative levels of GDP. comparative advantage. relative exchange rates. relative inflation rates.

comparative advantage.

Refer to the above graphs. These production possibilities curves: demonstrate that there can be gains from specialization and trade between the two nations. reflect the law of increasing opportunity costs. reflect the law of diminishing marginal utility. imply that specialization will be incomplete.

demonstrate that there can be gains from specialization and trade between the two nations.

In order for mutually beneficial trade to occur between two otherwise isolated nations: each nation must be able to produce at least one good absolutely cheaper than the other. each nation must be able to produce at least one good relatively cheaper than the other. each nation must face constant costs in the production of the good it exports. one nation's production must be labor-intensive while the other nation's production is capital-intensive.

each nation must be able to produce at least one good relatively cheaper than the other.

If the nominal wage rises by 4 percent, and the price level rises by 7 percent, the real wage will: be unaffected. rise by 3 percent. fall by 3 percent. rise by 11 percent.

fall by 3 percent

A firm hiring labor in a perfectly competitive labor market faces a: downsloping labor supply curve and upsloping labor demand curve. upsloping labor supply curve and downsloping labor demand curve. upsloping labor supply curve and horizontal labor demand curve. horizontal labor supply curve and downsloping labor demand curve.

horizontal labor supply curve and downsloping labor demand curve.

The real wage will rise if the nominal wage: falls more rapidly than the general price level. increases at the same rate as labor productivity. increases more rapidly than the general price level. falls at the same rate as the general price level.

increases more rapidly than the general price level.

Refer to the above diagrams. The profit-maximizing firm's total wage cost: is 0abc. is 0Wbc. is Wab. cannot be determined.

is 0Wbc.

Refer to the above diagrams. The profit-maximizing firm's total revenue: is 0abc. is 0Wbc. is Wab. cannot be determined.

is 0abc.

Answer the next question(s) on the basis of the following information about the cost ratios for two products-fish (F) and chicken (C)-in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C Refer to the above information. In Singsong the domestic real cost of each chicken: is 1/2a fish. is 2 fish. increases with the level of fish caught. decreases with the level of fish caught.

is 1/2a fish

Refer to the above tables. In Latalia the domestic real cost of 1 ton of pork: is 3 tons of beans. diminishes with the level of pork production. is 5 tons of beans. is 1/5of a ton of beans

is 5 tons of beans

Refer to the above diagrams. The firm: is a monopsonist in the hiring of labor. must be selling its product in an imperfectly competitive market. is a "wage taker." must pay a higher marginal resource cost for each successive worker.

is a "wage taker"

In the theory of comparative advantage, a good should be produced in that nation where: the production possibilities line lies further to the right than the trading possibilities line. its cost is least in terms of alternative goods that might otherwise be produced. its absolute cost in terms of real resources used is least. its absolute money cost of production is least.

its cost is least in terms of alternative goods that might otherwise be produced.

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until: marginal revenue product is zero. marginal revenue product exceeds marginal resource (labor) cost by the greatest amount. marginal resource cost is zero. marginal revenue product equals marginal resource (labor) cost.

marginal revenue product equals marginal resource (labor) cost.

The primary gain from international trade is: increased employment in the domestic export sector. more goods than would be attainable through domestic production alone. tariff revenue. increased employment in the domestic import sector.

more goods than would be attainable through domestic production alone.

If a nation has a comparative advantage in the production of X, this means the nation: cannot benefit by producing and trading this product. must give up less of other goods than other nations in producing a unit of X. has a production possibilities curve identical to those of other nations. is not subject to increasing opportunity costs.

must give up less of other goods than other nations in producing a unit of X.

The market supply curve for labor is upsloping because: of diminishing returns. of the opportunity cost of labor in housekeeping, leisure, or alternative employments. of declining MRC. each employer is a "wage taker."

of the opportunity cost of labor in housekeeping, leisure, or alternative employments

Refer to the above graphs. Terryville has a comparative advantage in producing: product A. product B. both product A and B. neither product A nor B.

product A

If the nominal wage rises by 6 percent, and the price level falls by 2 percent, the real wage will: be unaffected. rise by 4 percent. fall by 4 percent. rise by 8 percent.

rises by 8 percent

Suppose the MRP of a firm's twelfth worker is $22 and the worker's marginal wage cost is $16. We can say with certainty that the firm: is hiring labor in a competitive labor market at a wage rate of $16. is hiring labor in a monopsonistic labor market. will find it profitable to hire fewer workers. will find it profitable to hire more workers.

will find it profitable to hire more workers.